October 16, 2012

$PVCT.OB/$PVCTP: Friday Can't Come Soon Enough

One of my most vivid capital markets memories was of my first introduction to market expectations. It was a Friday morning during late autumn, and I was sitting on the T-bill desk of a bank trade floor. As an apprenticing trader for this bank, I went through rotations on different product desks. It was non-farm payroll Friday. Chatter quieted to murmuring and then became silence as the clock approached 8:30 am EDT. At the designated time, non-farm payroll data burst across the newswire. The number greatly exceeded the consensus figure by (I think) several hundred thousand. As far as I can recall, the number caught nearly everyone by surprise. Traders and salespeople on a floor that housed hundreds of employees reacted differently (much more, more or less animated, or not at all) depending on how their respective books were positioned in advance of the number in accordance with their belief of whether market expectations were going to be exceeded, met or not met. The traders on the interest rate derivatives desk, where my eyes were fixed at the time, were jumping up and down, high fiving one another and slapping each other on the back.

Friday, ironically, cannot come soon enough. The negativity or negative energy I have experienced and felt since the beginning of the PVCTP "IPO" process is unproductive. There is so much to the science of and patient benefit from rose bengal and PV-10, and to the stock and its eventual purchase by Big Pharma that I wish to blog more about. The last several weeks seemingly have stolen attention (understandably) from more interesting, more substantive topics.

The market anticipates, generally speaking, a PVCTP "IPO" at company unfriendly terms (i.e., expectations). Potential outcomes for Friday essentially include:
  1. A PVCTP "IPO" at company friendly terms (e.g., $15-20MM raise, a 2-to-1 or lower conversion ratio, 50% warrant coverage). The market does not expect this;
  2. A PVCTP "IPO" at company unfriendly terms (e.g., $15-20MM raise, an at or near at market conversion ratio [i.e., 6- to 8-to-1], 50% warrant coverage). The market expects this and is pricing some or most of it into the current share price; or
  3. The PVCTP "IPO" is killed. The market does not expect this.
Should #1 or #3 occur, the common stock share price would jump higher to varying degrees (#1 > #3) on Friday, and ascend next week.

If #2 were to occur, I think any initial sell-off of the common stock (presumably or likely by retail investors) eventually should turn into an upward move later (J-curve effect) because the presumption of the "IPO" is a steady stream of news and media awareness following its launch (and the spectre of the punitive effect of the "IPO" on the common stock will have disappeared).

While it is possible we may repeat whatever this is one more week, this Friday cannot come soon enough.

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